BBVA in 2012

Management of ESG risks

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BBVA integrates “ESG” variables into its risk management system. The ESG (environment, social and corporate governance) variables aim to manage extra-financial risks that can affect the credit profile of a borrower or financing project and may threaten the repayment of the debt. This is summed up in the following lines of action:

  • Ecorating: BBVA uses the Ecorating tool to value the risk portfolio of companies from an environmental point of view. It assigns each customer a level of credit risk according to a combination of various factors such as location, polluting emissions, consumption of resources, potential to affect the environment or applicable legislation. In 2012, BBVA has analyzed the environmental risk of 200.771 customers in Spain using the Ecorating tool
  • Equator Principles. These are global standards for determining, assessing and managing ESG risks when providing finance and advice for investment projects with a capital cost of over USD 10m. The criteria emanate from the performance standards of the International Finance Corporation and have been developed by the most active banks in project finance worldwide. BBVA does not take into consideration this minimum threshold, but rather applies the principles to all transactions, irrespective of the amount and the destination or allocation of the funds: not only to new projects or significant expansions, but also to project funding, acquisitions, refinancing, etc. As for the scope by product, BBVA extends them to consulting, bridge loans, projects in operation, project bonds, assignment of credit rights and buyer’s credit.
  • Activity with multilateral banks for regional development. In 2012, BBVA maintained close institutional and business relations with Multilateral Financial Institutions (MFI) which contribute to regional development, including the World Bank, the European Investment Bank (EIB), the Inter-American Development Bank (IDB), the Andean Development Corporation (ADC) and the European Bank for Reconstruction and Development (EBRD). These institutions require that the recipients of their funds have in place environmental, social, ethical and corporate governance risk management systems. The activities carried out during the year include: international trade financing, co-financing of projects, financial intermediation transactions, debt issues on local capital markets and trading floor operations.
  • Sector policies. Since 2005, BBVA had a policy on the financing of the defense sector which underwent a major review in 2011. All of the Group’s areas involved took part in the process, with advice from worldwide experts in the field and dialog with the most relevant stakeholders. The result of this work has been the defense-related policy approved in 2012, which expands the scope of the previous one and enhances it in terms of clarity and simplicity, guaranteeing compliance and traceability in line with the needs revealed by the Bank’s internal audit.
Categories of financing and advice projects according to the Equator Principles

(Million euros)

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Category 2012 2011 2010

Number of operations Total amount Amount financed by BBVA Number of operations Total amount Amount financed by BBVA Number of operations Total amount Amount financed by BBVA
Europe and North America A - - - - - - - - -

B 18 9,550 1,071 43 23,060 3,069 37 14,344 1,593

C 8 1,482 271 26 1,687 572 30 3,679 963
Total Europe and North America
26 11,033 1,341 69 24,748 3,641 67 18,023 2,555
Latin America A 4 1,380 135 1 158 53 - - -

B 19 3,652 781 13 5,381 1,245 22 4,379 975

C 7 438 190 4 275 120 2 211 84
Total Latin America
30 5,470 1,106 18 5,814 1,419 24 4,590 1,059
Rest of Group A 1 6,615 78 - - - - - -

B 2 56 28 2 690 161 4 1,625 206

C - - - 2 1,905 184 - - -
Total Rest of Group
3 6,670 106 4 2,595 345 4 1,625 206
Total Group
59 23,173 2,553 91 33,157 5,404 95 24,238 3,820
Category A: projects with a significant negative impact that may affect a wider area than that considered by the project.
Category B: projects with a minor negative impact on the human population or on areas of environmental importance.
Category C: projects with a very small or no impact on the environment
Scope: BBVA Group